Tesla stock dropped another 6.9% on Monday, wiping out over $68 billion from its market cap, as Elon Musk’s political ambitions dragged investor confidence through the dirt.
The latest blow came just two days after Elon announced plans to create a new political party, a decision that’s now rattling Wall Street and hammering Tesla’s valuation again for a second consecutive session.
Elon said Saturday the party’s goal would be to flip “2 or 3 Senate seats and 8 to 10 House districts,” claiming that would give him enough leverage to decide which laws pass. “Enough to serve as the deciding vote on contentious laws, ensuring that they serve the true will of the people,” Elon wrote.
Traders didn’t seem to share his optimism. Shares of Tesla plunged immediately after markets opened Monday, dragging the Nasdaq deeper into red as investors digested the consequences of their CEO turning into a full-time political actor.
Elon Musk stands by his decision as Tesla sinks
Elon’s renewed focus on politics comes as US equities take broader hits. The Dow Jones Industrial Average tumbled 400 points Monday, or 0.9%, while the S&P 500 lost 0.8% and the Nasdaq Composite shed 0.9%. The entire stock market took a hit after Trump announced new tariffs that will go into effect August 1.
The penalties target 14 countries, Bangladesh, Bosnia and Herzegovina, Cambodia, Indonesia, Japan, Laos, Malaysia, Myanmar, Serbia, South Africa, South Korea, Thailand, and Tunisia, across a wide range of imports.
Trump’s administration said the new tariffs would be just the first batch. White House press secretary Karoline Leavitt confirmed Monday that more announcements are coming this week. She added that Trump will sign an executive order extending the tariff implementation deadline to August 1, replacing his original, earlier date.
Dow futures dropped 87 points, while S&P 500 and Nasdaq 100 futures slid 0.16% and 0.15%, respectively, just hours before the cash markets opened Monday.
With all that background noise, Elon’s latest headline-grabbing play couldn’t have landed at a worse time. Danny Ives, who leads global tech research at Wedbush Securities, said in a client note that the decision is only making things worse.
“Very simply Elon diving deeper into politics and now trying to take on the Beltway establishment is exactly the opposite direction that Tesla investors/shareholders want him to take during this crucial period for the Tesla story,” Danny wrote Sunday.
He added that while Elon’s loyalists will back him no matter what, “there is broader sense of exhaustion from many Tesla investors that Elon keeps heading down the political track.”
On Sunday, Trump told reporters that Elon’s plan to launch a party was “ridiculous” and said the Tesla CEO had gone “completely off the rails.”
Market strategists still think the sell-off may be temporary. Adam Parker, CEO of Trivariate Research, told CNBC’s Closing Bell that confusion is playing a big role. “If you go through the details, I don’t even know if anybody understands the difference between what was announced today, what was there previously, and if it will actually be implemented, and which companies it actually impacts,” Parker said Monday.
He added that it could just be a breather before earnings season. “So, I think it’s just a little bit of selling as we got the highs, and kind of recalibrating before July earnings season,” he said. “But I don’t think this is the sign of a new regime at all.”
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